QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

For
the quarterly period ended August 3, 2002

Commission
file number 1-6049

Target Corporation (Exact name of registrant as specified in its charter)

Minnesota

41-0215170

(State of incorporation or organization)

(I.R.S. Employer Identification No.)

1000 Nicollet Mall, Minneapolis, Minnesota

55403

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code

(612) 304-6073

N/A (Former name, former address and former fiscal year, if changed since last report.)

The
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject
to such filing requirements for the past 90 days.

The
number of shares outstanding of common stock as of August 3, 2002 was 908,388,817.

* The
February 2, 2002 Consolidated Statement of Financial Position is condensed from the audited financial statement.

See
accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS
OF CASH FLOWS

TARGET CORPORATION

(Millions)

Six Months Ended

August 3

,

August 4

,

(Unaudited)

2002

2001

Operating activities

Net earnings

$

689

$

525

Reconciliation to cash flow:

Depreciation and amortization

584

515

Bad debt provision

192



Other non-cash items affecting earnings

106

56

Changes in operating accounts providing/(requiring) cash:

Accounts receivable

(665

)



Inventory

(100

)

(160

)

Other current assets

(197

)

(142

)

Other assets

(121

)

(67

)

Accounts payable

27

159

Accrued liabilities

13

(97

)

Income taxes payable

20

94

Other

19



Cash flow provided by operations

567

883

Investing activities

Expenditures for property and equipment

(1,479

)

(1,586

)

Decrease in receivable-backed securities



220

Proceeds from disposals of property and equipment

11

10

Cash flow required by investing activities

(1,468

)

(1,356

)

Net financing requirements

(901

)

(473

)

Financing activities

Decrease in notes payable, net



(247

)

Additions to long-term debt

2,500

1,750

Reductions of long-term debt

(245

)

(476

)

Dividends paid

(109

)

(99

)

Repurchase of stock



(14

)

Other

11

1

Cash flow provided by financing activities

2,157

915

Net increase in cash and cash equivalents

1,256

442

Cash and cash equivalents at beginning of year

499

356

Cash and cash equivalents at end of period

$

1,755

$

798

Amounts
in this statement are presented on a cash basis and therefore may differ from those shown elsewhere in this 10-Q report.

See
accompanying Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

TARGET CORPORATION

Accounting Policies

The
accompanying consolidated financial statements should be read in conjunction with the financial statement disclosures contained in our 2001 Annual Shareholders' Report throughout
pages 28-36. The same accounting policies are followed in preparing quarterly financial data as are followed in preparing annual data. In the opinion of management, all adjustments
necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature.

Certain
prior year amounts have been reclassified to conform to the current year presentation.

Due
to the seasonal nature of the retail industry, quarterly earnings are not necessarily indicative of the results that may be expected for the full fiscal year.

Extraordinary Items

In
April 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections." We elected to early adopt this Statement in the first quarter of 2002. Previously, all gains and losses from the early
extinguishment of debt were required to be aggregated and classified as an extraordinary item in the Consolidated Results of Operations, net of the related tax effect. Under SFAS No. 145, gains
and losses from the early extinguishment of debt will be included in interest expense. Prior year financial statements have been restated to reflect this change. The adoption of SFAS No. 145
has no impact on current year or previously reported net earnings, cash flows or financial position.

Derivatives

During
the second quarter, we entered into an interest rate swap with a notional amount of $400 million. The swap hedges the fair value of certain debt by effectively converting interest from
fixed rate to variable. During the quarter we also terminated an interest rate swap with a notional amount of $500 million. This transaction did not have a material impact on net earnings for
the quarter.

During
the first quarter we entered into an interest rate swap with a notional amount of $500 million.

The
fair value of our outstanding swaps is reflected in the financial statements and any "hedge ineffectiveness" is recognized in interest expense. At August 3, 2002, the fair value of our
existing swaps was immaterial.

Goodwill and Other Intangible Assets

In
the first quarter, we adopted SFAS No. 142, "Goodwill and Other Intangible Assets." We have complied with all of the adoption provisions of the Statement. The adoption of SFAS No. 142
reduced second quarter and year to date amortization expense by approximately $3 million and $5 million, respectively (less than $.01 per share). Additionally, we have completed our
initial impairment test and concluded that our $155 million of goodwill and indefinite lived intangible assets are not impaired.

Per Share Data

Basic EPS

Diluted EPS

Three Months
Ended

Six Months
Ended

Twelve Months
Ended

Three Months
Ended

Six Months
Ended

Twelve Months
Ended

Aug 3

,

Aug 4

,

Aug 3

,

Aug 4

,

Aug 3

,

Aug 4

,

Aug 3

,

Aug 4

,

Aug 3

,

Aug 4

,

Aug 3

,

Aug 4

,

2002

2001

2002

2001

2002

2001

2002

2001

2002

2001

2002

2001

Net earnings

$

344

$

271

$

689

$

525

$

1,532

$

1,292

$

344

$

271

$

689

$

525

$

1,532

$

1,292

Weighted average common shares outstanding

907.9

901.0

907.2

900.0

905.1

899.2

907.9

901.0

907.2

900.0

905.1

899.2

Stock options













5.1

7.9

6.7

8.7

7.3

8.9

Put options























.1

Total common equivalent shares outstanding

907.9

901.0

907.2

900.0

905.1

899.2

913.0

908.9

913.9

908.7

912.4

908.2

Earnings per share

$

.38

$

.30

$

.76

$

.58

$

1.69

$

1.44

$

.38

$

.30

$

.75

$

.58

$

1.68

$

1.43

Share Repurchase Program

Prior
to 2001, our Board of Directors authorized the repurchase of $2 billion of our common stock. Since the inception of our share repurchase program, we have repurchased a total of
40.5 million shares of our common stock at a total cost of $1,186 million ($29.29 per share), net of the premium from exercised and expired put options.

Common
stock repurchases under our program have been essentially suspended. Consequently, common stock repurchases did not have a material impact on our second quarter or year to date 2002 earnings
and financial position.

Long-term Debt

During
the second quarter and first half of 2002, we repurchased $46 million and $50 million, respectively, of long-term debt with a weighted average interest rate of
approximately 9.7 percent for each period. These transactions resulted in a pre-tax loss of $16 million and $18 million ($.01 per share) in the second quarter and
first half of 2002, respectively, which is included in interest expense in the Consolidated Results of Operations.

During
the second quarter we issued $750 million of long-term debt, bearing interest at 5.38 percent, maturing in June 2009. Also during the quarter, Target
Receivables Corporation sold, through the Target Credit Card Master Trust, $750 million of credit card receivables to the public in a secured debt transaction. This issue of receivable-backed
securities has an expected maturity of five years and a floating rate initially set at 1.99 percent. During the first quarter we issued $1 billion of long-term debt, bearing
interest at 5.88 percent, maturing in March 2012.

Accounts Receivable

Accounts
receivable is recorded net of an allowance for expected losses. The allowance, estimated from historical portfolio performance and projections of trends, was $332 million at
August 3, 2002 and $261 million at February 2, 2002.

Benefit Plans

Certain
non-qualified pension and survivor benefits owed to current executives were exchanged for deferrals in an existing defined contribution employee benefit plan. Additionally, certain
retired executives accepted our offer to exchange our obligation to them in a frozen non-qualified plan for deferrals in the existing defined contribution plan. These exchanges resulted in
second quarter pre-tax net expense of $15 million ($.01 per share) and year to date pre-tax net expense of $35 million ($.02 per share). These amounts reflect
$20 million and $47 million for the quarter and year to date, respectively, of additional defined contribution plan benefits expense partially offset by reduced net pension expense.

We
will enjoy lower future expenses as a result of these transactions because they were designed to be economically neutral or slightly favorable to us.

Segment Disclosures (Millions)

Revenues
by segment were as follows:

Three Months Ended

Six Months Ended

August 3

,

August 4

,

%

August 3

,

August 4

,

%

2002

2001

Change

2002

2001

Change

Target

$

8,499

$

7,311

16.2

%

$

16,528

$

14,082

17.4

%

Mervyn's

886

931

(4.9

)

1,749

1,802

(3.0

)

Marshall Field's

589

598

(1.4

)

1,214

1,227

(1.1

)

Other

94

101

(7.8

)

171

164

4.5

Total

$

10,068

$

8,941

12.6

%

$

19,662

$

17,275

13.8

%

Pre-tax
segment profit and the reconciliation to pre-tax earnings were as follows:

Three Months Ended

Six Months Ended

August 3

,

August 4

,

%

August 3

,

August 4

,

%

2002

2001

Change

2002

2001

Change

Target

$

708

$

522

35.5

%

$

1,386

$

1,024

35.3

%

Mervyn's

59

60

(1.2

)

111

108

3.0

Marshall Field's

18

16

18.0

50

39

28.8

Total pre-tax segment profit

785

598

31.4

1,547

1,171

32.1

Securitization adjustment (interest equivalent)



(13

)



(25

)

Interest expense

(154

)

(109

)

(289

)

(216

)

Other

(72

)

(37

)

(143

)

(82

)

Earnings before income taxes

$

559

$

439

27.4

%

$

1,115

$

848

31.5

%

MANAGEMENT'S DISCUSSION
AND ANALYSIS

TARGET CORPORATION

Analysis of Operations

Second
quarter 2002 net earnings were $344 million, or $.38 per share, compared with $271 million, or $.30 per share, for the same period last year. First half 2002 net earnings were
$689 million, or $.75 per share, compared with $525 million, or $.58 per share for first half 2001.

Revenues and Comparable-Store Sales

Total
revenues for the quarter increased 12.6 percent to $10,068 million compared with $8,941 million for the same period a year ago. Total comparable-store sales (sales from
stores open longer than one year) increased 3.0 percent. Our revenue growth reflected Target's new store expansion and comparable-store sales growth combined with growth in our credit card
operations.

Year-over-year
changes in comparable-store sales by business segment were as follows:

Three Months
Percentage
Change

Six Months
Percentage
Change

Target

4.4

%

5.6

%

Mervyn's

(5.1

)

(3.3

)

Marshall Field's

(2.5

)

(2.3

)

Total

3.0

%

4.1

%

Gross Margin Rate

The
gross margin rate represents gross margin (sales less cost of sales) as a percent of sales. In the second quarter, our gross margin rate was favorable to the second quarter of last year,
reflecting strong gross margin rate improvement at Target and Mervyn's.

Operating Expense Rate

The
operating expense rate represents selling, general and administrative expense as a percent of sales. In the second quarter, our operating expense rate was unfavorable to the second quarter of last
year, as growth in expense was only partially offset by the benefit of overall growth at Target, our lowest expense rate division.

Pre-tax Segment Profit

We
define pre-tax segment profit as earnings before LIFO, securitization effects, interest, other expense and unusual items. Our second quarter pre-tax segment profit increased
31.4 percent to $785 million compared with $598 million for the same period a year ago. Pre-tax segment profit in the first half of 2002 increased 32.1 percent
to $1,547 million compared with $1,171 million for the same period a year ago. During the second quarter 2002, Target's pre-tax profit increased 35.5

percent
from the same period a year ago while Mervyn's pre-tax profit decreased 1.2 percent and Marshall Field's pre-tax profit improved 18.0 percent. A
reconciliation of pre-tax segment profit to pre-tax earnings is provided in the Notes to Consolidated Financial Statements.

Other Performance Factors

The
total of interest expense and interest equivalent was $154 million and $289 million in the second quarter and first half of 2002, representing a $32 million and
$48 million increase, respectively, from the same periods last year. The increase in interest expense and interest equivalent was due to the repurchase of high interest rate debt at a premium
and higher average funded balances, partially offset by the benefit of a lower average portfolio interest rate. For analytical purposes, the amounts that represented payments accrued to holders of
sold securitized receivables prior to August 22, 2001 are considered as "interest equivalent." After that date such payments constitute interest expense.

Our
financial condition remains strong. We continue to fund the growth in our business through a combination of internally generated funds and debt.

For
the second quarter, total gross receivables serviced increased $1,949 million, or 72.5 percent, over the second quarter of last year. The growth in receivables serviced was driven by
the company's national roll-out of the Target Visa card. Inventory increased $141 million, or 3.2 percent, over the second quarter of last year primarily reflecting new
square footage growth at Target. The inventory growth was more than fully funded by a $452 million, or 12 percent, increase in accounts payable.

Capital
expenditures for the first half of 2002 were $1,479 million, compared with $1,586 million for the same period a year ago. The 2001 expenditures included the acquisition of rights
to 35 former Montgomery Wards stores. Investment in Target stores accounted for 94 percent of current year capital expenditures.

Our
share repurchase program is described in the Notes to Consolidated Financial Statements.

Credit Card Operations (Millions)

Our
credit card programs strategically support our core retail operations and are an integral component of each business segment. Therefore, included in each segment's pre-tax profit is
revenue and expense from its credit card operations.

Credit
card contribution to pre-tax segment profit on an accounts receivable serviced basis was as follows:

Three Months Ended

Six Months Ended

August 3

,

August 4

,

August 3

,

August 4

,

2002

2001

2002

2001

Revenues

Finance charges, late fees and other revenues

$

262

$

175

$

506

$

350

Merchant fees

Intracompany

23

22

45

44

Third-party

15

1

29

2

Total revenues

300

198

580

396

Expenses

Bad debt

103

45

192

81

Operations and marketing

68

50

144

102

Total expenses

171

95

336

183

Pre-tax credit contribution

$

129

$

103

$

244

$

213

Total
receivables serviced were as follows:

August 3

,

August 4

,

2002

2001

Target

Guest Card

$

865

$

1,255

Target Visa

2,534

131

Mervyn's

586

639

Marshall Field's

651

662

Quarter-end receivables serviced

$

4,636

$

2,687

Past due*

5.6

%

6.8

%

Average receivables serviced

$

4,301

$

2,732

*Accounts
with two or more payments past due as a percent of total outstanding receivables.

The
allowance for doubtful accounts on serviced receivables was as follows:

Three Months Ended

Six Months Ended

August 3

,

August 4

,

August 3

,

August 4

,

2002

2001

2002

2001

Allowance at beginning of period

$

297

$

207

$

261

$

211

Bad debt provision

103

45

192

81

Net write-offs

(68

)

(39

)

(121

)

(79

)

Allowance at end of period

$

332

$

213

$

332

$

213

As a percent of period-end receivables serviced

7.2

%

7.9

%

7.2

%

7.9

%

As a multiple of current 12 months net write-offs

1.5

1.4

1.5

1.4

Store Data

During
the quarter, we opened a total of 33 new Target stores. Net of relocations and closings, these openings included 19 discount stores and 7 SuperTarget stores. At August 3, 2002, our
number of stores and retail square feet were as follows:

We
provide the following supplemental information derived from our financial statements because we believe it provides a meaningful aid to the analysis of our performance by segment. We define segment
EBITDA as pre-tax segment profit before depreciation and amortization expense. Our definition of EBITDA and pre-tax segment profit may differ from definitions used by other
companies. This presentation is not intended to be a substitute for GAAP reported measures of profitability and cash flow. A reconciliation of pre-tax segment profit to pre-tax
earnings is provided in the Notes to Consolidated Financial Statements. Segment EBITDA and the reconciliation of pre-tax segment profit were as follows:

Three Months Ended

Six Months Ended

August 3

,

August 4

,

%

August 3

,

August 4

,

%

2002

2001

Change

2002

2001

Change

Target

$

931

$

709

31.2

%

$

1,830

$

1,395

31.1

%

Mervyn's

86

91

(5.2

)

167

171

(1.9

)

Marshall Field's

49

50

(0.3

)

113

107

5.8

Total segment EBITDA

$

1,066

$

850

25.5

%

$

2,110

$

1,673

26.1

Segment depreciation and amortization

(281

)

(252

)

(563

)

(502

)

Pre-tax segment profit

$

785

$

598

31.4

%

$

1,547

$

1,171

32.1

%

Cash flows provided by/(used for):

Operating activities

$

567

$

883

Investing activities

(1,468

)

(1,356

)

Financing activities

2,157

915

Net increase in cash and cash equivalents

$

1,256

$

442

Outlook for Fiscal Year 2002

For
the full year, we believe that we are well positioned to deliver strong growth in revenues and earnings. We expect this growth to be driven by increases in comparable-store sales and contributions
from new store growth at Target as well as by continued growth in contribution from our credit card operations, primarily through the Target Visa credit card. For the Corporation overall, gross margin
rate and operating expense rates are expected to remain essentially even with 2001.

Interest
expense is expected to be considerably higher than interest expense and interest equivalent in 2001 due to higher average funded balances to support expansion of Target stores and credit
card receivables.

Forward-Looking Statements

The
preceding Management's Discussion and Analysis contains forward-looking statements regarding our performance, liquidity and the adequacy of our capital resources. Those statements are based on our
current assumptions and expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. We caution that the forward-looking
statements are qualified by the risks and challenges posed by increased competition, shifting consumer demand, changing consumer credit markets, changing capital markets and general economic
conditions, hiring and retaining effective team members, sourcing merchandise from domestic and international vendors, investing in new business strategies, achieving our growth objectives, the
outbreak of war and other significant national and international events, and other risks and uncertainties. As a result, while we believe that there is a reasonable basis for the forward-looking
statements, you should not place undue reliance on those statements. You are encouraged to review Exhibit (99)C attached to our Form 10-K Report for the year ended
February 2, 2002, which contains additional important factors that may cause actual results to differ materially from those predicted in the forward-looking statements.

PART II. OTHER INFORMATION

Item 6.

Exhibits and Reports on Form 8-K

a)

Exhibits

(2).

Not applicable

(4)A.

Amended and Restated Rights Agreement, dated as of August 5, 2002, between Target Corporation and Mellon Investor Services LLC.

(4)B.

Instruments defining the rights of security holders, including indentures. Registrant agrees to furnish the Commission on request copies of instruments with respect to long-term debt.

(10).

Not applicable

(11).

Not applicable

(12).

Statements re Computations of Ratios

(15).

Not applicable

(18).

Not applicable

(19).

Not applicable

(22).

Not applicable

(23).

Not applicable

(24).

Not applicable

b)

Reports on Form 8-K:

Form 8-K filed July 11, 2002, providing the News Release relating to June sales results.

Form 8-K filed August 8, 2002, providing the News Release relating to July sales results.

Form 8-K filed August 15, 2002, providing the News Release relating to second quarter results.

Form 8-K filed September 5, 2002, providing the News Release relating to August sales results.

Signature

Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

I
have reviewed this quarterly report on Form 10-Q of Target Corporation;

2.

Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the
circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.

Date: September 13, 2002

/s/ Robert J. Ulrich Robert J. Ulrich
Chairman of the Board and Chief Executive Officer

I, Douglas A. Scovanner, certify that:

1.

I
have reviewed this quarterly report on Form 10-Q of Target Corporation;

2.

Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report.